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OK, some people in Aussie #FinServ are clearly unsettled by Vanguard& #39;s decision to boldly have a crack (again) at #superannuation.
So I& #39;m gonna break it down in this thread.
I may be on the money, or way off base. You decide.
So I& #39;m gonna break it down in this thread.
I may be on the money, or way off base. You decide.
It& #39;s important to note that @vanguard_au was its first presence outside the US.
From memory, around 1995-96.
So this hasn& #39;t exactly been an overnight success story.
For much of the first two decades, & paying $0 commissions, it was broadly shunned by #financialplanning.
From memory, around 1995-96.
So this hasn& #39;t exactly been an overnight success story.
For much of the first two decades, & paying $0 commissions, it was broadly shunned by #financialplanning.
The prize that lured Vanguard to Australia was #superannuation.
But the cost of client acquisition for retail is high.
Funds without a dedicated salesforce (or default status) struggle.
Plum, the corp super JV with MLC, was a bit meh for market penetration.
But the cost of client acquisition for retail is high.
Funds without a dedicated salesforce (or default status) struggle.
Plum, the corp super JV with MLC, was a bit meh for market penetration.
So the pragmatic pivot for Vanguard Aust was to manage Insto mandates for other super funds.
And to chip away at retail super via non-aligned Financial Planners.
The fillip starts in 2009-10 with two key inquiries; Rippoll into #financialadvice & Cooper into #superannuation.
And to chip away at retail super via non-aligned Financial Planners.
The fillip starts in 2009-10 with two key inquiries; Rippoll into #financialadvice & Cooper into #superannuation.
1 July 2013 and upfront + trailing commission for new advice clients goes the way of the Dodo & a statutory Best Interest Duty arises.
Not long after the first of the MySuper funds is up & running; broadly-diversified and *low cost*.
Vanguard& #39;s happy hunting ground.
Not long after the first of the MySuper funds is up & running; broadly-diversified and *low cost*.
Vanguard& #39;s happy hunting ground.
As Jeff Bezos said, "Your margin is my opportunity".
And there is a *lot* of fat in the #superannuation industry.
How much? Well...
And there is a *lot* of fat in the #superannuation industry.
How much? Well...
And across asset classes, the story is little different.
Super fund CIOs may say Aussie #investmentmanagement fees for listed assets are competitive, but detailed 2017 Prod Comm analysis revealed otherwise.
Lowering the cost of managing listed assets is Vanguard& #39;s jam.
Super fund CIOs may say Aussie #investmentmanagement fees for listed assets are competitive, but detailed 2017 Prod Comm analysis revealed otherwise.
Lowering the cost of managing listed assets is Vanguard& #39;s jam.
And as I outlined in this recent piece for @MichaelWestBiz, investment & admin fees for #superannuation are in excess of $30bn per annum now. https://www.michaelwest.com.au/snouts-in-the-superannuation-trough-turbo-charging-paul-keatings-legacy/">https://www.michaelwest.com.au/snouts-in...
A fact that Treasurer Frydenberg also alluded to in his Your Future, Your Super announcement in #Budget2021.
https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/media-releases/your-future-your-super-making-your-super-work-harder">https://ministers.treasury.gov.au/ministers...
https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/media-releases/your-future-your-super-making-your-super-work-harder">https://ministers.treasury.gov.au/ministers...
So why are super execs, retail & not-for-profit, sweating the announcement of Vanguard Australia returning all mandates back to Insto funds as it looks to launch its own retail #superannuation fund in Australia?
Three words: & #39;The Vanguard Effect& #39;.
Source: @EricBalchunas
Three words: & #39;The Vanguard Effect& #39;.
Source: @EricBalchunas
The move to return what& #39;s suggested to be up to $100bn in insto mandates might seem like insanity, until you realise that it& #39;s probably $20m in headline revenue tops.
Vanguard has far bigger ambitions. And its moves in China provide a clue. https://www.pionline.com/money-management/vanguard-returns-21-billion-assets-china-state-funds">https://www.pionline.com/money-man...
Vanguard has far bigger ambitions. And its moves in China provide a clue. https://www.pionline.com/money-management/vanguard-returns-21-billion-assets-china-state-funds">https://www.pionline.com/money-man...
In short, Vanguard is going after retail #superannuation.
Makes sense. Big 4 banks effectively out.
AMP, IOOF, Macquarie + Platforms the only real competition. Oh, and of course Industry Funds.
Which is where this gets weird.
Vanguard needs Fin Planners on-board.
Makes sense. Big 4 banks effectively out.
AMP, IOOF, Macquarie + Platforms the only real competition. Oh, and of course Industry Funds.
Which is where this gets weird.
Vanguard needs Fin Planners on-board.
So Vanguard& #39;s PR messaging seems to walk a fine line between empowering individuals & helping Advisers deliver better #superannuation to more people.
Each way bet? Possible.
No other reason to keep flogging the & #39;Adviser Alpha& #39; message which is, um, not empirically that robust.
Each way bet? Possible.
No other reason to keep flogging the & #39;Adviser Alpha& #39; message which is, um, not empirically that robust.
Where to from here?
A retail Vanguard #superannuation fund? Yes.
Lower fees for other funds? Very likely.
And Frydenberg& #39;s proposed annual performance checks for funds could not have been better timed for Vanguard Aust.
The next 3+ years will be interesting to say the least.
A retail Vanguard #superannuation fund? Yes.
Lower fees for other funds? Very likely.
And Frydenberg& #39;s proposed annual performance checks for funds could not have been better timed for Vanguard Aust.
The next 3+ years will be interesting to say the least.
